8 October 2010

Michael White - semi-soothscribe

Assistant Editor White is a 30-year, hard-core Guardianista, a cohort that normally produces the worst kind of locked-into-the-60s lefty bleating, so it is a pleasant surprise to find that he has written a balanced article on John Hutton's interim report on state sector pensions.

Hutton is a heavy-hitter. He was Secretary of State for Work and Pensions 2005-7, and despite having accurately predicted that Brown would be a "fucking disaster" as prime minister, went on to become Secretary of State for Business, Enterprise and Regulatory Reform, and finally Secretary of State for Defence from October 2008 until he resigned in mid 2009 and announced he would not stand at the next election. Despite this, he got a peerage in Brown's dissolution honours.

Anyway - back to White's article, which chides the state sector unions for pissing into the wind about the unfunded pension liabilities that have been mounting up ever since Thatcher bought them off back in 1980-81 (that last bit is my view, not White's).

On pensions there is always good news to offset the bad. Yes, most currently struggle to pay their way, but the underlying cause of the problem, alongside breezily over-optimistic promises by companies and governments, is that most of us are living so much longer.

Public sector workers talk of lower pay than the private sector in return for greater job security and state-backed pension. Such arguments fail to impress their private sector colleagues who have seen final salary schemes - in some cases, all pension schemes - modified or close as a combination of factors exposed their financial fragility.

The free market narrative blames chancellor Gordon Brown, whose famous assault on pension fund tax perks (building on Norman Lamont's early raid) did not help. But nor did company pension contribution holidays in the boom years, followed by panic after the stock market tanked. Rarely put in the dock is the change to transparent accounting, which forced private companies to stop pretending all was well.

White's blind spot is to think that a tu quoque about Lamont and the shaky accounting of some private pension plans balances the fact that Brown deliberately set out to destroy the best funded private pensions in Europe, with the intention of privileging the state sector. But he is far from unique in this - everyone seems to forget that Brown's malevolent plan was put into action as soon as he became chancellor, over 13 years ago.

Brown also pushed state salaries up to parity with the wealth-producing sector without reducing the multiple perks that had previously "compensated" the statist drones for their lower pay, while increasing their numbers. He also poured state funding into the state sector unions, with the aim of creating a highly privileged, unsackable mass of Labour party clients in the state apparat - and he succeeded.

So, although White writes sensibly about Young's sensible proposals, by limiting themselves to demographic issues they both avoid discussing the politics of how such a blatant imbalance came about. The state sector union bosses quite clearly intend to deliver on their side of the evil bargain Brown struck with them.